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Speaker 1: M. This is Mesters in Business with Very Results on

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Speaker 1: Bloomberg Radio. This week on the podcast, I have an

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Speaker 1: extra special guest. Jennifer Grancio was there at the beginning

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Speaker 1: at Barclays when the beginning of E t F S

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Speaker 1: and passive indexing really took off on an institutional basis.

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Speaker 1: She was one of the founding members when Blackrock bought

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Speaker 1: I shares from Barclays and and really helped drive broad

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Speaker 1: adoption of passive and and E t F s UH

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Speaker 1: in the financial community. Today, she is the CEO of

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Speaker 1: Engine Number One, which focuses on the fascinating transitions that

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Speaker 1: are taking place in broad strokes across the economy. There

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Speaker 1: are numerous opportunities and energy and climate and robotics and automation,

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Speaker 1: and her firm helps invest in those spaces. Not quite

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Speaker 1: an activist investor, but she has worked with a number

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Speaker 1: of companies like Exxon and General Motors and Occidental where

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Speaker 1: the input of Engine Number One drove significant changes at

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Speaker 1: those companies. They're a long time investor. They're not a

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Speaker 1: black hat activist where they're looking to buy stock, force

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Speaker 1: an exit of the CEO and sell once the stock pops.

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Speaker 1: Really fascinating story. I found it quite fascinating and I

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Speaker 1: think you will as well. So, with no further ado,

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Speaker 1: my interview with engine number ones Jennifer Grencio. Let's start

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Speaker 1: out talking about the early part of your career. I'm

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Speaker 1: really curious how you ended up in black Rock, but

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Speaker 1: before that, you're working as a consultant. Yes, I think

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Speaker 1: like a lot of people on Underground actually ended up.

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Speaker 1: I went to Stanford thinking I was going to do

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Speaker 1: genetics and science. UM didn't interns to pivoted, ended up

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Speaker 1: doing international relations. Then, as you had towards the end

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Speaker 1: of college, you figure you're gonna save the world, and

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Speaker 1: I'm gonna go work for the World Bank. World Bank

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Speaker 1: wants you to take out more student debt and get

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Speaker 1: a master's degree. So, like so many other bright eyed graduates, UM,

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Speaker 1: I trooped off to, you know, one of the traditional

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Speaker 1: professional services professions. UM. The thing it was kind of

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Speaker 1: interesting for me about consulting was this idea that you

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Speaker 1: you almost apprentice with somebody that's senior, and you run

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Speaker 1: around and try to help companies with problems. So seems

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Speaker 1: like a good idea at the time of the time,

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Speaker 1: and that's what I went off to do. So how

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Speaker 1: do you go from that? How do you end up

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Speaker 1: at a place like black Rock? I share seems to

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Speaker 1: have been almost an accidental business line from them. I'm

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Speaker 1: remembering correctly. That was a post financial crisis Barclays purchase

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Speaker 1: something along exactly, yes, exactly, yeah, So if you go back,

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Speaker 1: So I management consulting, moved back to California, decided I

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Speaker 1: was going to be a California person, not a New Yorker.

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Speaker 1: No offense to New York. Spent a lot, and so

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Speaker 1: I went looking for what I thought would be the

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Speaker 1: best asset management business. I focused on asset management within

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Speaker 1: the consulting space, like this idea that somehow if you

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Speaker 1: got portfolio construction and savings right, you help people over time. Um,

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Speaker 1: And so I joined what was Barclay's at the time.

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Speaker 1: The asset management business of Barkley's bank was this little

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Speaker 1: firm called Barkley's Global Investors based in San Francisco. And

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Speaker 1: that was not such a little firm at the time.

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Speaker 1: Was now it was growing very quickly, and that business

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Speaker 1: was an institutional business. So as an institutional business, we

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Speaker 1: did indexing. We thought indexing was cool. Um and the

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Speaker 1: eye shares in the e t F idea came from

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Speaker 1: we just had a fundamental belief it was a better

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Speaker 1: mouse trap. So there's something about an e t F

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Speaker 1: and we could go into that another time. There's something

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Speaker 1: about an e t F that's a better mouse trap

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Speaker 1: than a mutual fund. And so for Barkley's Bank, we pitched,

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Speaker 1: here's a great idea, let's build this e t F

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Speaker 1: business in the US. And it's a way for Barkley's

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Speaker 1: to build in the United States. And so we launched

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Speaker 1: the business in two thousands. So we launched it right

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Speaker 1: into the dot com crisis. So from the dot com

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Speaker 1: crisis to the global financial crisis, what were the circumstances

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Speaker 1: surrounding black Rock Santa Barclay's, Well, we'll take that little

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Speaker 1: worthless business off your hands for a couple of hours. Yeah,

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Speaker 1: And the interesting thing about an e t F business

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Speaker 1: is that it takes a long time to build. And

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Speaker 1: so to your question, around that time, going into two

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Speaker 1: thousand and eight, Barclay's need in cash and the index

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Speaker 1: business was starting to take off in the form of ETFs,

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Speaker 1: or at least we thought that, but it was still

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Speaker 1: a relatively small business. Um and So who were the

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Speaker 1: other people that probably looked at that acquisition included other

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Speaker 1: big indexers, big asset managers who weren't sure was indexing

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Speaker 1: going to be a thing or not, because remember at

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Speaker 1: the time e T S and index were synonymous. But Larry,

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Speaker 1: you know, it was more forward looking, Larry being Larry

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Speaker 1: Fink of black Rock, who arguably, and I know who

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Speaker 1: Larry is. I just want the audience to know, arguably,

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Speaker 1: the purchase of I Shares by black Rock from Barclays

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Speaker 1: could be one of the great opportunistic distress purchases in

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Speaker 1: the middle of a crisis. Ever in financials, what is

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Speaker 1: I shares up to now? Like four trillion dollars something

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Speaker 1: insane enormous. Yeah, So and they picked it up for

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Speaker 1: a teeny tiny fraction of that. So what was your

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Speaker 1: experience like when black Rock took over I Shares. Yeah,

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Speaker 1: So we we built the ICE Shares business first within

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Speaker 1: Barclays UM and we were a you know, small but

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Speaker 1: mighty team doing e T s and the whole idea

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Speaker 1: remember of ets, is to go and to challenge mutual

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Speaker 1: funds and challenge active management. So that's a big thing

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Speaker 1: to take on. And so as black Rock worked through

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Speaker 1: the acquisition of all of the v g I business,

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Speaker 1: including I Shares. We spent a couple of years then

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Speaker 1: getting to know black Rock as a little Eye Shares

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Speaker 1: team UM and talking about e t F s and

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Speaker 1: fee based advice and portfolio construction and all these things

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Speaker 1: that we thought were trends could take advantage of and

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Speaker 1: used to build the business. UM. But then the business

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Speaker 1: really just got from strength to strength after that acquisition.

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Speaker 1: We came out of the financial crisis a few rocky

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Speaker 1: years in the e t F industry overall, Vanguard decided

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Speaker 1: to get into e t s in a serious way. UM.

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Speaker 1: Black Rock and I Shares launched that core series as

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Speaker 1: a competitive business, so kind of responding to what was

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Speaker 1: going on in the market. And the business continue to

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Speaker 1: grow and grow. And then I think from an e

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Speaker 1: t F industry perspective, UM, we did some important work

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Speaker 1: on trying to protect the category of e t F.

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Speaker 1: So we did a lot of work with US regulators, UM,

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Speaker 1: European regulators. I ran the business in Europe for a

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Speaker 1: while as well. UM. Talking about the differences between a

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Speaker 1: passive index fund, for example, and e t F that's

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Speaker 1: got commodity exposure and E t F that's leveraged or

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Speaker 1: inverse in terms of trying to protect the vehicle and

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Speaker 1: protect the category. And really since then there's just been

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Speaker 1: continued explosive growth. In your wildest dreams, did you ever

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Speaker 1: imagine back from the sleepy early days of passive and

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Speaker 1: E t F at Barclay's that would grow up to

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Speaker 1: be just the dominant intellectual force and investing and reach

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Speaker 1: the size it's reached. What is even after this year

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Speaker 1: black Rock is something like eight trillion, nine trillion and eight. Yeah,

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Speaker 1: I mean the numbers are huge. I think we did

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Speaker 1: but maybe that maybe we were naive, but our view

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Speaker 1: was it just it was it was a trend that

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Speaker 1: was going to happen, and if you could own the

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Speaker 1: trend and if you could accelerate the trend, this was

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Speaker 1: a better way to invest. A better way to invest

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Speaker 1: is to have a low cost solution at the core

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Speaker 1: of the portfolio and then hire people that are deeply

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Speaker 1: capable to deliver alpha. So I would say we thought

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Speaker 1: it could be big, but you know, it's pretty amazing.

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Speaker 1: So you talk about accelerating the trend, what exactly do

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Speaker 1: you do to help accelerate that trend. How do you

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Speaker 1: drive acceptance of both e t f s as a

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Speaker 1: rapper as opposed to the traditional forty act mutual funds

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Speaker 1: and passive US is more traditional stock picking, market timing,

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Speaker 1: active investment. Yeah, I think we when the industry first started,

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Speaker 1: So going back, you know, twenty years now, the two

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Speaker 1: things were synonymous. But you know, let's let's take those

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Speaker 1: one at a time. So from a passive perspective, the

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Speaker 1: argument we made as an industry selling passive ETFs was

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Speaker 1: you really had to take a look at what the

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Speaker 1: portfolio is doing over time, total cost, total risk exposure.

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Speaker 1: And when you did that, you often found that there

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Speaker 1: was a way to get better long term performance and

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Speaker 1: cheaper by having some index in a portfolio. So that

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Speaker 1: was the story on index saying, and then we kind

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Speaker 1: of kept driving that into this idea of models. So

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Speaker 1: now you know, we have there's a model a huge

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Speaker 1: amount of money. You know, trillions of dollars sit in

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Speaker 1: models in US wealth. What does that mean? It means

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Speaker 1: a big wirehouse or brokerage puts a model together this

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Speaker 1: much Europe, this much US, this much small cap, and

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Speaker 1: then you can use index products to fill all those allocations.

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Speaker 1: And so that was the kind of the twenty year

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Speaker 1: build of how did passive get so big? UM, and

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Speaker 1: then E t F is a rapper. It's just it's

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Speaker 1: just a great way to get the price at the

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Speaker 1: moment if you're buying into the public markets. Number one,

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Speaker 1: UM and number two, it's a great way to manage

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Speaker 1: tax where if you buy something now and you sell

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Speaker 1: it in twenty years and the market has gone up,

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Speaker 1: guess what we all have to pay tax on that.

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Speaker 1: But the kind of annual capital gains gift you get

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Speaker 1: from a lot of mutual funds, it can be managed

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Speaker 1: very astutely in the E T F rapper And that's

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Speaker 1: that's great, Like that's great for all investors. Meaning if

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Speaker 1: you're a mutual fun owner who's not selling, but somebody

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Speaker 1: else sells and generates a capital gain that gets spread

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Speaker 1: around to the other it doesn't make I mean, as

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Speaker 1: somebody that's been doing ETFs for a long time, I say,

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Speaker 1: it doesn't make any sense whatsoever, because there's another way

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Speaker 1: to do it, and we're fine, and we're finally seeing

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Speaker 1: that now we're finally seeing a lot of the big

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Speaker 1: mutual fund companies start converting into E T s the flows,

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Speaker 1: even in a down year like the flows have all

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Speaker 1: been towards passive, towards e t F, towards low cost.

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Speaker 1: It seems like a much better mass trap. I think

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Speaker 1: it is. I'm not going to get much of an

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Speaker 1: argument from you on that. So you mentioned Vanguard, we're

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Speaker 1: talking about black Rock. Let's talk a little bit about

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Speaker 1: the role of branding in the industry. How important is

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Speaker 1: that when you're putting out either a low cost, passive

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Speaker 1: et F at three or four BIPs or something more

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Speaker 1: active or thematic on the t F side. Yeah, I mean,

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Speaker 1: the role of brand is pretty critical. And if you

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Speaker 1: think about in the index business, if you're managing it, well,

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Speaker 1: there's not a lot of performances. Are you a tracking

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Speaker 1: the index? Yes or no? And so that power of

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Speaker 1: the brand is massive. And my observation in the space

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Speaker 1: is that the average investor, the average retail person that's

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Speaker 1: going out and investing or talking to an advisor, they

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Speaker 1: don't necessarily know one product provider or investor versus another,

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Speaker 1: but they definitely know who they do business with or

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Speaker 1: who they buy from. So that retail brokerage brand, their

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Speaker 1: advisory brand, has a huge impact them. So do your

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Speaker 1: question on Vanguard like Vanguards a brokerage firm, so you

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Speaker 1: kind of know Vanguard Vanguards in your form one K

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Speaker 1: you've heard of Vanguard, and so for other people that

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Speaker 1: enter the industry, and this is certainly what we did

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Speaker 1: in the eye shares business or what we do now

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Speaker 1: at engine. Number one is you really have to be

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Speaker 1: clear on who are you and what is your story

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Speaker 1: because the brand matters a lot. So you mentioned brokerage firms,

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Speaker 1: and Vanguard does for Owen k broke Ridge, they do

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Speaker 1: all sorts of obviously mutual funds and e t f s.

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Speaker 1: How do you see some of the bigger custodians and

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Speaker 1: actual brokers like Schwab and Fidelity In terms of et

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Speaker 1: F developments, we know it's black Rock, Vanguard and State

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Speaker 1: Street at the top. These guys are no slouches either,

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Speaker 1: are they now? I mean, I would say if we

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Speaker 1: go back and we look at the history of e

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Speaker 1: t s and how they've developed, we see State Street, Vanguard,

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Speaker 1: black Rock, black Rock Eye Shares as very dominant and

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Speaker 1: they're going to continue to be dominant in passive period.

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Speaker 1: They're they're they're big, They're so big now, Um, and

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Speaker 1: we'll come back to this later. I personally think there's

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Speaker 1: some problems with how big they are, but from an

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Speaker 1: ease of buying decision making perspective, they're big. They're dominant.

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Speaker 1: The brokerages were late to get in the game, so

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Speaker 1: Fidelity and Schwab got in much later. They didn't They

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Speaker 1: don't charge fees for those products, and so it makes

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Speaker 1: it harder for them as a kind of a corporate

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Speaker 1: organism to you know, have that be a big part

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Speaker 1: of their business. And then what we're very excited about

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Speaker 1: it Engine number one and what you're seeing with the

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Speaker 1: mutual fund conversions, the big ones at d f A,

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Speaker 1: at Franklin, Templeton, the list goes on. There are many

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Speaker 1: is that we're now ready to move back to funds

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Speaker 1: into the E t F structure, and that I think

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Speaker 1: is very exciting. But that's new. That's a very new development.

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Speaker 1: So let's talk a little bit about Engine number one. First.

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Speaker 1: How did you get there from black Rock? What led

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Speaker 1: that transition? Yeah, so I left black Rocks very large.

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Speaker 1: I wanted to do a little bit more innovation, and

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Speaker 1: I think sometimes the biggest firms are great, but they

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Speaker 1: can't always lead from an inner vation or change perspective UM.

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Speaker 1: So I spent a couple of years, I built an

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Speaker 1: advisory firm UM and took a couple of years. I decided,

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Speaker 1: you know what what was the next move? And I

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Speaker 1: had some great did some great work with a number

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Speaker 1: of large wealth in r A firms that were going

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Speaker 1: through an M and A or selling themselves process. UM

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Speaker 1: did some work on impact investing. Actually led me to

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Speaker 1: Ethic and joined the Mankind Board. But decided I was

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Speaker 1: I I was definitely going to be a builder, that

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Speaker 1: there was this opportunity to do something different than traditional

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Speaker 1: mutual fund and passive e T f U, and so

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Speaker 1: I started looking for what would be the thing I

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Speaker 1: wanted to build with partners UM. And then I met

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Speaker 1: Chris James and did you launch engine number one or

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Speaker 1: did you join him when it was already existing? We

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Speaker 1: launched it together. But Chris is going back, you know,

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Speaker 1: before we started the firm. So Chris James is our

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Speaker 1: founder at and TO number one. And Chris's background is

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Speaker 1: hedge fund and private fund investments, and what he's really

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Speaker 1: known for is he's known for taking an extremely long

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Speaker 1: view on something and doing the work UNTI let's say,

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Speaker 1: where's the opportunity as you go through a huge train,

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Speaker 1: information or transition. So Chris was hard at work on

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Speaker 1: this and wanted to reach into the wealth space. So

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Speaker 1: rather than just doing products that were private and you

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Speaker 1: could help institutions invest, um, what could we do that

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Speaker 1: was broad and into the wealth space. UM? So I

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Speaker 1: joined him to collaborate given my background on that side

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Speaker 1: of the business, and the idea of Engine number one

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Speaker 1: is just to help people benefit from these huge transitions

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Speaker 1: and transformations that are very much not the backwards looking look.

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Speaker 1: Google and Amazon got great. You know, our portfolios have

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Speaker 1: a lot of growth in tech great. There's a lot

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Speaker 1: of money to be made in the energy transition, transportation, agriculture,

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Speaker 1: and so really the idea of the firm is to

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Speaker 1: be able to look forward, find miss pricing, and make

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Speaker 1: money as we go through these huge changes. The firm's

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Speaker 1: name is intriguing. Where does Engine number one come from?

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Speaker 1: The first firehouse in San Francisco is actually a couple

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Speaker 1: of blocks from our office. UM. And in talking about

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Speaker 1: what we were trying to do, which is maybe it's grandios,

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Speaker 1: but if you think about it, like capitalism works, and

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Speaker 1: what we were agitated about is we saw the market

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Speaker 1: you have E s G over here very small. We

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Speaker 1: think old school E s G is not does not work.

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Speaker 1: We have a strong view on that. And come back

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Speaker 1: to that indexing. Too many shares are locked up in indexes.

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Speaker 1: Index don't vote their shares. And then maybe most important

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Speaker 1: of all, we're going to need a general motors and

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Speaker 1: afford to actually be able to do this huge transition

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Speaker 1: from internal combustion to battery electric vehicles. And so you know,

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Speaker 1: actually the firehouse is the center of the community, right

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Speaker 1: and if you think about how a community survives, the

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Speaker 1: firehouse is the center the community takes care of itself.

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Speaker 1: A well run business really should be as simple as

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Speaker 1: sort of taking care of the environment. It's in being

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Speaker 1: aware of it. And in public markets that means you

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Speaker 1: also have to be able to adapt and manage their change.

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Speaker 1: So tell us a little bit about the strategies you

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Speaker 1: guys employ. What are your key focuses? How do you

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Speaker 1: deploy capital? Yeah, we as a business, we run an

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Speaker 1: all its business and then we run the e t

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Speaker 1: F platform. So that if you think about it, very simply,

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Speaker 1: these huge ideas about transition and transformation and how to

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Speaker 1: make money are very common across what we do, but

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Speaker 1: we have two businesses and UM, the big ideas are

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Speaker 1: these transitions and transformations and how do you take advantage.

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Speaker 1: And so when we look at public companies, we look

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Speaker 1: at every single company and we look at what their

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Speaker 1: path is through time. So I think this is one

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Speaker 1: of the problems with a lot of investment strategies right now,

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Speaker 1: as they're looking too short term UM. And then we

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Speaker 1: build the impact or externality data, we just build it

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Speaker 1: into the financial model, right because the data is out there,

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Speaker 1: particularly on governance, particularly on environmental issues. And when we

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Speaker 1: do that in these sectors that are in transition. Let's

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Speaker 1: take energy for example, if you're an oil and gas

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Speaker 1: company and you don't account for the emissions that you're

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Speaker 1: dealing with and you don't decrease them over time, you're

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Speaker 1: gonna have a problem. And we saw this when we

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Speaker 1: started building the business that a lot of these companies

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Speaker 1: were heading towards zero terminal value. So let's take X

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Speaker 1: on for sample, where if you take X on and

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Speaker 1: X and keeps doing long dated fossil fuel projects and

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Speaker 1: has no plan to reduce emissions at any point in time,

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Speaker 1: and has no plans to develop a green business. Well,

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Speaker 1: that's not very good for x on stock when we

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Speaker 1: get to seven or ten years out, and so we

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Speaker 1: see a lot of these opportunities where like it's just math.

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Speaker 1: The capitalist system is supposed to have the company government

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Speaker 1: itself so that it's making money through time, it has

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Speaker 1: a longer duration of business, and it has a higher value.

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Speaker 1: And that's the kind of the way that we work

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Speaker 1: in everything that we do. So you mentioned environmental issues

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Speaker 1: and impact, you mentioned governance. This sounds a lot like

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Speaker 1: two thirds of E s G. Yeah, we think the

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Speaker 1: way people use that label is a little bit problematic.

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Speaker 1: So people often use that label looking backwards. Flesh that

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Speaker 1: out a little more. When when I hear someone mentioned

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Speaker 1: E s G, I typically think of an investor. And

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Speaker 1: for the most part, as we go through this generational

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Speaker 1: wealth TRANSFERM you do surveys of investors husband passed away,

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Speaker 1: the wife tends to be much more empathetic with issues

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Speaker 1: of equality and environmental concerns, and the next generation is

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Speaker 1: much more concerned. So it seems like there is a

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Speaker 1: desire to express those beliefs in their portfolios. Why does

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Speaker 1: that not work with the s J. Yeah, I mean

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Speaker 1: our I guess our view on that would be you

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Speaker 1: can always express values in a portfolio. But if you're

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Speaker 1: going to express values in a portfolio, say that I

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Speaker 1: am expressing my values in the portfolio, which is different

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Speaker 1: than the core concept of managing money over time is

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Speaker 1: generally for the person that's doing the managing is to

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Speaker 1: be a fiduciary and drive good outcomes and strong returns,

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Speaker 1: and for in general for the investor is to drive

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Speaker 1: returns over time um. And so the way we think

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Speaker 1: about it is, really you can do that, and any

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Speaker 1: business that is going to survive over time time has

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Speaker 1: to be sustainable, has to address or basically cover their

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Speaker 1: impacts right after the cost of capital so that they

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Speaker 1: can be profitable over time. So instead of thinking E

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Speaker 1: s G means its values based I don't like the company,

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Speaker 1: they're bad, I'm going to screen amount of my portfolio.

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Speaker 1: We don't think that's a great way to manage your

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Speaker 1: core portfolio over time. We think the better way is

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Speaker 1: you simply have to engage with the companies to make

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Speaker 1: sure that their most material impacts. That's financial data, right,

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Speaker 1: that's risk data. If you don't manage your emissions as

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Speaker 1: an oil and gas company, and so let's build that

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Speaker 1: into just investing to make returns as opposed to this

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Speaker 1: special class which you know it values based in E

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Speaker 1: s G. Tends to kind of infer value over performance,

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Speaker 1: right or divesting from companies that you don't like, and

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Speaker 1: that's we don't think that's a great way to invest.

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Speaker 1: So let me push back a little bit on the

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Speaker 1: low carbon strategy. It seems like it's uh half of

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Speaker 1: the economic equation because p pool seem to be approaching

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Speaker 1: entities like x on Mobile and others, the suppliers of

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Speaker 1: the carbon based fuel. What is that doing if you're

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Speaker 1: ignoring the other half, the consumers? So every other company

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Speaker 1: that is not a carbon energy producer is likely to

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Speaker 1: be a carbon energy consumer. They're running factories, they're shipping goods,

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Speaker 1: they're having offices. Why focus on one half of the

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Speaker 1: equation and not the other? Yeah, I mean, I think

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Speaker 1: that's the right question, and we focus on both. And

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Speaker 1: so let's take for a minute the energy industry and

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Speaker 1: then the transportation or auto industry. That's an example of

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Speaker 1: that kind of handshake or handlock. Right, So in the

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Speaker 1: case of the car companies, that's consumption. So if we're

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Speaker 1: consumers and we're driving cars, which we still do when

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Speaker 1: people are planning to do in the future. The car

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Speaker 1: company can switch from encouraging the behavior of driving internal

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Speaker 1: combustion engines which have very high emissions, or the car

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Speaker 1: company can know that the consumer demand is shifting a

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Speaker 1: little bit and they can build a car that is

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Speaker 1: an awesome battery electric, reasonably priced vehicle, and then they

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Speaker 1: can capture that shift in demand, and that's really good

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Speaker 1: for the car company. So we actually, we ad percent

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Speaker 1: believe that this has to primarily be driven on the

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Speaker 1: consumer demand sign and on the first piece of that.

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Speaker 1: So if I'm a consumer, i buy a car, you've

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Speaker 1: got to start with the car company. However, if you

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Speaker 1: look at global emissions, you know percent of that today

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Speaker 1: comes from the energy companies. So at the same time,

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Speaker 1: in parallel, there's still an opportunity to work with those

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Speaker 1: companies on as battery electric comes up, as fossil fuel

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Speaker 1: comes down, how do those companies make a lot of

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Speaker 1: money nine or ten years from now as we go

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Speaker 1: through that transition. Explain that thirty because again it's that

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Speaker 1: someone's a buyer, someone's a seller. They're not burning thirty

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Speaker 1: percent of the fossil fuels, they're selling it to consumers

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Speaker 1: who who are burning it. Like though there are some

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Speaker 1: low carbon ETFs, I just don't understand. It's why the

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Speaker 1: war on drugs failed. If you're only gonna interdict the

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Speaker 1: supply but ignore the demands, you're not going to be successful. Yeah,

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Speaker 1: that's right, I mean, And we think from an investment perspective,

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Speaker 1: if you want to solve this problem on how do

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Speaker 1: you take emissions down? We think that problem can be

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Speaker 1: solved and you can make money by owning the people

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Speaker 1: that are gonna win. So you asked before, like what

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Speaker 1: do we do? What strategies do we run? In the

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Speaker 1: e t F business are active team it's it's effectively

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Speaker 1: hedge fund investors. So they're very concentrated portfolios. We believe

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Speaker 1: we're right. It's a handful of names, like under thirty

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Speaker 1: names today in the portfolio um tickers net z, so

432
00:22:34,800 --> 00:22:38,840
Speaker 1: Climate Transform, Climate net z. And what that portfolio holds

433
00:22:38,880 --> 00:22:43,119
Speaker 1: is it holds companies that have emissions. But we believe

434
00:22:43,160 --> 00:22:45,520
Speaker 1: that the companies in the portfolio are the companies that

435
00:22:45,600 --> 00:22:48,679
Speaker 1: have the right strategy to if I'm an energy company,

436
00:22:48,720 --> 00:22:51,480
Speaker 1: I'm producing energy. There's demand for energy. That's what I do.

437
00:22:51,760 --> 00:22:54,360
Speaker 1: But I'll tell you my emissions, I'll do methane, third

438
00:22:54,400 --> 00:22:57,600
Speaker 1: party monitoring, I'll do all the right things, so that

439
00:22:57,680 --> 00:23:00,480
Speaker 1: from a social license to operate perspective, I'm at the

440
00:23:00,520 --> 00:23:03,240
Speaker 1: top of my peer group. And in all cases they

441
00:23:03,280 --> 00:23:06,439
Speaker 1: have a strategy, whereas fossil fuel demand to clients not

442
00:23:06,560 --> 00:23:09,680
Speaker 1: today but in seven ten years, they have a strategy

443
00:23:09,720 --> 00:23:12,200
Speaker 1: to actually make money and still have value. So we're

444
00:23:12,200 --> 00:23:14,960
Speaker 1: picking the top best performing energy companies. We're not seeing

445
00:23:15,040 --> 00:23:18,000
Speaker 1: energies bad energies essential and we need that energy in

446
00:23:18,040 --> 00:23:21,120
Speaker 1: the transition. And the portfolio then also holds the car

447
00:23:21,160 --> 00:23:23,560
Speaker 1: companies that we think when so let's talk about a

448
00:23:23,560 --> 00:23:26,200
Speaker 1: couple of names. So a couple of energy names from

449
00:23:26,280 --> 00:23:29,680
Speaker 1: net Z and a couple of car companies from that six. Yeah,

450
00:23:29,720 --> 00:23:31,840
Speaker 1: and so one of the names we had in the portfolio,

451
00:23:31,880 --> 00:23:33,960
Speaker 1: which is actually so highly valued it goes in and

452
00:23:34,000 --> 00:23:36,359
Speaker 1: out depending on if it's overvalued. It's an active fund

453
00:23:36,720 --> 00:23:39,920
Speaker 1: um is Occidental and Oxy And that's an example. They

454
00:23:39,960 --> 00:23:41,639
Speaker 1: were really the leader in the space that they had

455
00:23:41,640 --> 00:23:44,800
Speaker 1: started to develop greener businesses so that as fossil use

456
00:23:44,920 --> 00:23:47,840
Speaker 1: comes down, they have another business in their competitive that's

457
00:23:47,880 --> 00:23:50,439
Speaker 1: great for long term value of the company. And what

458
00:23:50,520 --> 00:23:53,480
Speaker 1: are their green businesses, things like solar and wind or

459
00:23:54,040 --> 00:23:55,560
Speaker 1: they have a range of things that they do in

460
00:23:55,600 --> 00:23:58,000
Speaker 1: that space. But think of it as committing early to

461
00:23:58,080 --> 00:24:00,879
Speaker 1: find ways to make money, having people on staff on

462
00:24:00,920 --> 00:24:03,679
Speaker 1: the board that know how to run green businesses, and

463
00:24:03,720 --> 00:24:07,600
Speaker 1: then from a um from an emissions perspective, also, they

464
00:24:07,600 --> 00:24:11,679
Speaker 1: were very early on telling us being very transparent on

465
00:24:11,720 --> 00:24:14,760
Speaker 1: Scope one and two and agreeing to oil gas methane

466
00:24:14,760 --> 00:24:18,879
Speaker 1: partnership emissions with third party monitoring of emissions, which we

467
00:24:18,880 --> 00:24:23,040
Speaker 1: think is critical because again methane emissions leaking, that's probably

468
00:24:23,040 --> 00:24:25,639
Speaker 1: the biggest thing, especially with natural gas, but with pretty

469
00:24:25,680 --> 00:24:29,800
Speaker 1: any any form of carbon that's capture your carbon um

470
00:24:30,680 --> 00:24:33,359
Speaker 1: removal from the ground, that's a big risk. Methane is

471
00:24:33,440 --> 00:24:36,560
Speaker 1: even worse than CEO two and and that's right, and

472
00:24:36,560 --> 00:24:38,399
Speaker 1: that's some of the active ownership work we did in

473
00:24:38,440 --> 00:24:42,679
Speaker 1: that portfolio. Or Canoko and Devon are companies that we

474
00:24:42,760 --> 00:24:46,800
Speaker 1: worked with to join the methane third party verification partnership

475
00:24:46,920 --> 00:24:49,480
Speaker 1: this past summer. And that's when we talk about Engine

476
00:24:49,520 --> 00:24:52,359
Speaker 1: number one as active owners it's not always you know,

477
00:24:52,440 --> 00:24:55,440
Speaker 1: the black hat activist. We actually haven't done that other

478
00:24:55,480 --> 00:24:59,000
Speaker 1: than excellent. But the ability to really understand their business

479
00:24:59,040 --> 00:25:01,760
Speaker 1: and go in and work with them on actually having

480
00:25:01,800 --> 00:25:04,760
Speaker 1: the methane verified is a big deal because then people

481
00:25:04,840 --> 00:25:06,840
Speaker 1: understand what you're doing in that part of the business

482
00:25:06,840 --> 00:25:09,520
Speaker 1: and it gives you license to operate because we need

483
00:25:09,560 --> 00:25:12,120
Speaker 1: we need that energy source. What are the car companies

484
00:25:12,119 --> 00:25:15,240
Speaker 1: that are in netzy UM General Motors is in net

485
00:25:15,320 --> 00:25:17,720
Speaker 1: z Ford has been. It goes in and out of

486
00:25:17,720 --> 00:25:20,000
Speaker 1: the portfolio based on how they're doing managing some of

487
00:25:20,040 --> 00:25:24,040
Speaker 1: their supply chain constraint issues. And then UM Tesla's in

488
00:25:24,040 --> 00:25:27,480
Speaker 1: the portfolio, but GM's at a much larger weight than Tesla,

489
00:25:27,600 --> 00:25:29,960
Speaker 1: and then Tesla went out of the portfolio for governance

490
00:25:29,960 --> 00:25:34,400
Speaker 1: reasons because Twitter. Because of Twitter. So if you think

491
00:25:34,440 --> 00:25:37,160
Speaker 1: about so the way that we manage that portfolio, basically

492
00:25:37,200 --> 00:25:40,000
Speaker 1: what net z is is you're holding some of the

493
00:25:40,000 --> 00:25:43,679
Speaker 1: biggest emitters and you're holding this one point eight metric

494
00:25:43,760 --> 00:25:46,919
Speaker 1: tons of emissions a year, so not low carbon, high carbon,

495
00:25:47,280 --> 00:25:50,159
Speaker 1: and then what we expect is that those companies are

496
00:25:50,200 --> 00:25:52,080
Speaker 1: going to take that number down to less than half

497
00:25:52,520 --> 00:25:54,800
Speaker 1: within a decade. And so if you care about impact

498
00:25:54,880 --> 00:25:57,320
Speaker 1: or sustainability, yeah, that's great, that's a huge win. You're

499
00:25:57,359 --> 00:26:00,440
Speaker 1: holding the company's watching them, they're taking amission is down.

500
00:26:00,920 --> 00:26:03,439
Speaker 1: But if you want to make money, you're holding the

501
00:26:03,480 --> 00:26:05,760
Speaker 1: companies that are providing energy but doing it in a

502
00:26:05,800 --> 00:26:08,159
Speaker 1: way that they have a social license to operate. And

503
00:26:08,200 --> 00:26:10,000
Speaker 1: then so to come back to your test, like example,

504
00:26:10,400 --> 00:26:12,399
Speaker 1: all of it starts with governance. And so if a

505
00:26:12,400 --> 00:26:14,880
Speaker 1: public company is going to make money over years and years,

506
00:26:14,960 --> 00:26:17,479
Speaker 1: it's it's all about governance and do you understand your markets?

507
00:26:17,480 --> 00:26:20,320
Speaker 1: Do you understand how things change? And so if you're

508
00:26:20,400 --> 00:26:22,960
Speaker 1: running Tesla and you have a huge job to do

509
00:26:23,000 --> 00:26:25,880
Speaker 1: in terms of scaling that business, but you're also doing

510
00:26:25,880 --> 00:26:27,840
Speaker 1: other things at the same time and saying you don't

511
00:26:27,880 --> 00:26:30,359
Speaker 1: time to run Tesla, well that's kind of a governance issue.

512
00:26:30,600 --> 00:26:33,440
Speaker 1: So when I look at the acquisition of Twitter, which

513
00:26:33,520 --> 00:26:36,720
Speaker 1: started out as a lark forty four billion, the market

514
00:26:36,800 --> 00:26:41,000
Speaker 1: drops wild over payment. The bigger issue is if you

515
00:26:41,040 --> 00:26:46,119
Speaker 1: think about who's Tesla buyers, they seem to not be

516
00:26:46,400 --> 00:26:52,320
Speaker 1: the people who Ellen is playing too on Twitter. And

517
00:26:52,359 --> 00:26:55,040
Speaker 1: in fact, as much as there are a lot of

518
00:26:55,040 --> 00:26:57,200
Speaker 1: fan boys, and I think you have to give Elon

519
00:26:57,320 --> 00:27:00,879
Speaker 1: full credit for moving the entire auto wind industry to

520
00:27:01,040 --> 00:27:03,920
Speaker 1: e v S. I think all the legacy makers looked

521
00:27:03,920 --> 00:27:06,840
Speaker 1: at him and said, we can't let Ellen do to

522
00:27:06,960 --> 00:27:09,679
Speaker 1: us what Bezos did to the book industry and the

523
00:27:09,680 --> 00:27:13,439
Speaker 1: booksellers and a dozen other industries. But it seems like

524
00:27:13,560 --> 00:27:19,200
Speaker 1: he's alienating that core middle left, all those liberals we're

525
00:27:19,200 --> 00:27:22,600
Speaker 1: gonna own on Twitter. He seems to be chasing away

526
00:27:22,640 --> 00:27:27,480
Speaker 1: a lot of his future buyers of Tesla's He may

527
00:27:27,480 --> 00:27:30,040
Speaker 1: be that's good news for GM, though, So okay, we're

528
00:27:30,040 --> 00:27:33,080
Speaker 1: covered on that one. You don't care and to say

529
00:27:33,080 --> 00:27:36,160
Speaker 1: nothing about valuation issues and other sort of things, I'm

530
00:27:36,160 --> 00:27:40,760
Speaker 1: assuming this isn't strictly UH s G checklist you look

531
00:27:40,840 --> 00:27:43,560
Speaker 1: at We look at the usual things, and that that's

532
00:27:43,600 --> 00:27:46,240
Speaker 1: maybe our main point, which is the people people get

533
00:27:46,280 --> 00:27:49,399
Speaker 1: in our industry in particular, they get stuck in old frameworks,

534
00:27:49,520 --> 00:27:51,800
Speaker 1: right and E t F is an index fund UH

535
00:27:51,840 --> 00:27:54,840
Speaker 1: and activist is somebody that comes in short term and

536
00:27:54,880 --> 00:27:56,800
Speaker 1: fires the CEO. So I think we need to be

537
00:27:56,800 --> 00:27:59,160
Speaker 1: careful of those quart of short ways and short hand

538
00:27:59,160 --> 00:28:02,479
Speaker 1: ways of thinking in investments. Our point of view is

539
00:28:02,560 --> 00:28:05,520
Speaker 1: that there's a lot of data available now, we have

540
00:28:05,520 --> 00:28:08,439
Speaker 1: a huge amount of data. Take the climate and environmental

541
00:28:08,560 --> 00:28:10,919
Speaker 1: related issues. We have a lot of data on carbon

542
00:28:11,240 --> 00:28:13,639
Speaker 1: and we can estimate carbon prices, and so in a

543
00:28:13,880 --> 00:28:17,480
Speaker 1: basic fundamental financial model, you can start with your old

544
00:28:17,560 --> 00:28:20,359
Speaker 1: traditional financial model, but you can add in we do this,

545
00:28:20,560 --> 00:28:23,399
Speaker 1: we can add in the monetization of those emissions, and

546
00:28:23,440 --> 00:28:25,760
Speaker 1: then as you build out your financial model, you can

547
00:28:25,800 --> 00:28:28,480
Speaker 1: look at how the company reduces them over time. And

548
00:28:28,520 --> 00:28:31,560
Speaker 1: we just we see those as purely financial metrics, right

549
00:28:31,920 --> 00:28:34,960
Speaker 1: that those a large, large externality for a company is

550
00:28:35,000 --> 00:28:37,600
Speaker 1: a risk or financial measure. It's not some separate e

551
00:28:37,800 --> 00:28:41,560
Speaker 1: s g. Dot bubble rating system. It's just it's their numbers,

552
00:28:41,560 --> 00:28:43,720
Speaker 1: it's math. It should go into the long term valuation

553
00:28:43,720 --> 00:28:47,800
Speaker 1: of the business. Let's talk about the x On situation.

554
00:28:48,440 --> 00:28:52,960
Speaker 1: You accumulated a relatively small number of shares and then

555
00:28:53,040 --> 00:28:57,360
Speaker 1: reached out to management. Tell us about the process and

556
00:28:57,400 --> 00:29:01,200
Speaker 1: how they reacted to your overture. Yeah, so from a

557
00:29:01,200 --> 00:29:04,920
Speaker 1: team perspective, we we've started by making an economic case.

558
00:29:05,040 --> 00:29:07,440
Speaker 1: So we did the work on here's what we would

559
00:29:07,480 --> 00:29:09,520
Speaker 1: do differently, Here's how we think the value of the

560
00:29:09,560 --> 00:29:12,280
Speaker 1: business would be higher if we did this. And these

561
00:29:12,280 --> 00:29:15,720
Speaker 1: suggestions on what we would do differently included disclosure of

562
00:29:15,760 --> 00:29:21,520
Speaker 1: emissions it included better capital allocation decisions between this sort

563
00:29:21,520 --> 00:29:25,160
Speaker 1: of short term energy transition period and we don't know

564
00:29:25,200 --> 00:29:27,240
Speaker 1: when it's going to be thanks to you know, putting

565
00:29:27,280 --> 00:29:29,400
Speaker 1: in the Ukraine longer than we thought a year ago,

566
00:29:29,480 --> 00:29:31,520
Speaker 1: but at some point we're going to start to really

567
00:29:31,520 --> 00:29:34,920
Speaker 1: pivot into an energy transition. And so what what is

568
00:29:35,000 --> 00:29:37,640
Speaker 1: what's your best thinking x on as a company on

569
00:29:37,760 --> 00:29:39,920
Speaker 1: what your business looks like, in your capability at a

570
00:29:39,920 --> 00:29:43,280
Speaker 1: board level to extend the duration of the business, do

571
00:29:43,400 --> 00:29:46,120
Speaker 1: things that may be renewable or whatever they may be.

572
00:29:46,560 --> 00:29:48,480
Speaker 1: What is it that you can do that's in that area,

573
00:29:48,920 --> 00:29:51,320
Speaker 1: um And so those were the things that we requested.

574
00:29:51,440 --> 00:29:54,040
Speaker 1: They were receptive to that, and they were not receptive

575
00:29:54,080 --> 00:29:56,480
Speaker 1: to that, But those are the things that were requested,

576
00:29:56,480 --> 00:30:00,360
Speaker 1: which is usually how these things start. So point two

577
00:30:00,360 --> 00:30:03,680
Speaker 1: percent of outstanding shares doesn't exactly put the fear of

578
00:30:03,720 --> 00:30:06,640
Speaker 1: God into them. Why a toe in the water and

579
00:30:06,760 --> 00:30:10,040
Speaker 1: not a more substantial stake x on. Going back to

580
00:30:10,040 --> 00:30:13,240
Speaker 1: when we started the proxy campaign, there they were giants,

581
00:30:13,240 --> 00:30:15,640
Speaker 1: but also there were a giant in terms of the

582
00:30:15,640 --> 00:30:18,120
Speaker 1: big asset managers had not been able to get them

583
00:30:18,120 --> 00:30:21,840
Speaker 1: to pivot from a governance perspective, so there were known

584
00:30:21,880 --> 00:30:25,280
Speaker 1: concerns about governance. A lot of the big investors take

585
00:30:25,360 --> 00:30:29,239
Speaker 1: a slower approach to work with management. Not caused too

586
00:30:29,320 --> 00:30:32,160
Speaker 1: much change request changes UM and there just hadn't been

587
00:30:32,200 --> 00:30:35,560
Speaker 1: any progress in this case. So we were able to

588
00:30:35,720 --> 00:30:38,280
Speaker 1: have conversations and the team did a huge amount of

589
00:30:38,280 --> 00:30:42,800
Speaker 1: work with investors and passive investors and active investors walking

590
00:30:42,800 --> 00:30:46,120
Speaker 1: through our economic case. If these things happen, better governance,

591
00:30:46,200 --> 00:30:49,920
Speaker 1: better economic performance, and that we think is what allowed

592
00:30:50,000 --> 00:30:53,000
Speaker 1: us to rally support and as we were rallying support

593
00:30:53,480 --> 00:30:55,520
Speaker 1: UM as you as you see in this situation, I'm

594
00:30:55,560 --> 00:30:58,320
Speaker 1: sure Exxon was talking to some of those investors as well.

595
00:30:58,560 --> 00:31:01,560
Speaker 1: And so as we went through the campaign process, we

596
00:31:01,600 --> 00:31:05,000
Speaker 1: saw some of these changes on changes in capital allocation

597
00:31:05,200 --> 00:31:09,080
Speaker 1: decisions UM and intention to launch a green business. So

598
00:31:09,120 --> 00:31:12,400
Speaker 1: some of these changes started even before the proxy vote

599
00:31:12,400 --> 00:31:15,480
Speaker 1: where new directors were directly elected onto the board. So

600
00:31:15,840 --> 00:31:19,959
Speaker 1: we talk a lot about specific companies. How do you

601
00:31:20,000 --> 00:31:24,520
Speaker 1: look at the macro environment and geopolitics? You mentioned Putin's

602
00:31:24,560 --> 00:31:29,160
Speaker 1: invasion of the Russian invasion of Ukraine. Arguably that's going

603
00:31:29,200 --> 00:31:33,000
Speaker 1: to accelerate the greening of Europe in particular, and the

604
00:31:33,040 --> 00:31:37,600
Speaker 1: move to alternative energy sources not dependent on Russia, which

605
00:31:37,680 --> 00:31:41,160
Speaker 1: is old carbon. Yeah, and I think this is some extent.

606
00:31:41,240 --> 00:31:43,520
Speaker 1: You can't control what is the moment in time where

607
00:31:43,560 --> 00:31:48,080
Speaker 1: the energy transition happens. Right, However, now, right, aren't we

608
00:31:48,200 --> 00:31:50,040
Speaker 1: more or less in the midst of this today? We're

609
00:31:50,080 --> 00:31:53,680
Speaker 1: in that. We are in the transition absolutely, But we

610
00:31:53,760 --> 00:31:57,920
Speaker 1: think that if you wanted to not use fossil or

611
00:31:57,960 --> 00:32:01,280
Speaker 1: carbon intensive now, it wouldn't possibly work. We're not ready

612
00:32:01,360 --> 00:32:04,680
Speaker 1: to be transitioned. We are in the transition um. And

613
00:32:04,720 --> 00:32:06,360
Speaker 1: so the way we think about it is we have

614
00:32:06,400 --> 00:32:08,320
Speaker 1: to be very savvy about where do you have a

615
00:32:08,360 --> 00:32:12,080
Speaker 1: brown business, Where can that brown business be gray? Where

616
00:32:12,080 --> 00:32:14,800
Speaker 1: does it start to use green techniques. Natural gas is

617
00:32:14,800 --> 00:32:17,520
Speaker 1: a great example. We need natural gas, So how do

618
00:32:17,560 --> 00:32:20,400
Speaker 1: you move natural gas in a way where you're looking

619
00:32:20,400 --> 00:32:23,920
Speaker 1: at methane? You don't have methane leagues, you're using green

620
00:32:24,200 --> 00:32:27,400
Speaker 1: energy and electric sources to process the natural gas. There

621
00:32:27,400 --> 00:32:28,880
Speaker 1: are a lot of things we can do even while

622
00:32:28,880 --> 00:32:32,000
Speaker 1: we're using fossil, to be cleaner and to put the

623
00:32:32,040 --> 00:32:34,880
Speaker 1: people that are cleaner and doing fossil in a better

624
00:32:34,920 --> 00:32:38,320
Speaker 1: position to sell versus their competitor. Because we are seeing

625
00:32:38,320 --> 00:32:40,400
Speaker 1: these changes, and we do have a lot of people

626
00:32:40,440 --> 00:32:43,840
Speaker 1: looking at carbon footprint as they're buying or investing in companies.

627
00:32:44,360 --> 00:32:48,240
Speaker 1: So my colleague met Levine mentioned your win and now

628
00:32:48,360 --> 00:32:52,000
Speaker 1: says when they see you coming, you are no longer

629
00:32:52,080 --> 00:32:57,200
Speaker 1: presenting as a scrappy small startup. You're bringing some receipts

630
00:32:57,240 --> 00:33:01,320
Speaker 1: to the table. Hey, excellent, knuckle down there. Now, let's

631
00:33:01,320 --> 00:33:04,640
Speaker 1: you and I have a conversation. How has that changed

632
00:33:05,160 --> 00:33:09,240
Speaker 1: since that win? Yeah, we really started when we started

633
00:33:09,360 --> 00:33:12,440
Speaker 1: with Exxon effectively, and so I wouldn't say we had

634
00:33:12,760 --> 00:33:15,000
Speaker 1: um it was the next day. It was a sea

635
00:33:15,080 --> 00:33:18,040
Speaker 1: change in a positive way. I would say it's complicated

636
00:33:18,120 --> 00:33:20,600
Speaker 1: because after you've done that, the board in the CEO

637
00:33:20,640 --> 00:33:22,760
Speaker 1: are a little bit worried about what our intentions are

638
00:33:23,160 --> 00:33:26,640
Speaker 1: UM And it takes time to build those relationships. And

639
00:33:26,720 --> 00:33:28,920
Speaker 1: Chris does a lot of this work directly with the

640
00:33:28,960 --> 00:33:32,520
Speaker 1: CEOs and the companies that are in the portfolios. UM

641
00:33:32,520 --> 00:33:35,320
Speaker 1: And it takes time to build trust. But our relationship

642
00:33:35,360 --> 00:33:38,720
Speaker 1: with them is, you know, basically having modeled their business

643
00:33:38,760 --> 00:33:42,120
Speaker 1: ourselves and modeled all their competitor businesses and have gone

644
00:33:42,120 --> 00:33:44,200
Speaker 1: to kind of up and down the supply chains. And

645
00:33:44,280 --> 00:33:45,880
Speaker 1: once we get to know each other. We're giving them

646
00:33:45,880 --> 00:33:48,640
Speaker 1: what they find is actually some very helpful point of view.

647
00:33:49,000 --> 00:33:50,560
Speaker 1: And if I like at your business, I think this,

648
00:33:50,800 --> 00:33:53,479
Speaker 1: you know, consumer demand is going to flip sooner you're

649
00:33:53,480 --> 00:33:56,040
Speaker 1: gonna miss it? Or what's you know? How organized are

650
00:33:56,080 --> 00:33:58,640
Speaker 1: you on supply chain? What are your bottlenecks? And so

651
00:33:58,720 --> 00:34:01,840
Speaker 1: it's become really very constructive with a lot of the

652
00:34:01,840 --> 00:34:04,720
Speaker 1: companies that we work with. It sounds like you're early

653
00:34:04,920 --> 00:34:09,719
Speaker 1: training in the consultant world. It wasn't for naught. This

654
00:34:09,800 --> 00:34:14,360
Speaker 1: is almost a hybrid between activists investing and consultants and

655
00:34:14,520 --> 00:34:17,440
Speaker 1: just investing right. High quality investing means you really have

656
00:34:17,520 --> 00:34:20,600
Speaker 1: to understand, um what a company's strategy is and what

657
00:34:20,680 --> 00:34:22,759
Speaker 1: the what are the what are the bottlenecks, what are

658
00:34:22,760 --> 00:34:25,200
Speaker 1: the places where they may miss If you understand those,

659
00:34:25,600 --> 00:34:29,160
Speaker 1: you can make those faster, shorter, better, less risk. Then

660
00:34:29,200 --> 00:34:31,800
Speaker 1: that's really positive for being more sure that the company

661
00:34:31,840 --> 00:34:34,120
Speaker 1: increases in value. So let's talk a little bit about

662
00:34:34,120 --> 00:34:37,959
Speaker 1: your toolbox. You mentioned proxy voting, you mentioned modeling. What

663
00:34:38,000 --> 00:34:41,600
Speaker 1: else does engine number one bring to the table as

664
00:34:41,680 --> 00:34:46,080
Speaker 1: ways to get management to see the world from your perspective? Yeah,

665
00:34:46,080 --> 00:34:48,160
Speaker 1: And part of it is that the data science work

666
00:34:48,200 --> 00:34:52,239
Speaker 1: that we do around the sizing of emissions, comparative emissions,

667
00:34:52,360 --> 00:34:55,920
Speaker 1: monetization of emissions. So we call that our total value

668
00:34:56,040 --> 00:34:59,239
Speaker 1: approach to looking at the externalities of these companies. So

669
00:34:59,280 --> 00:35:02,880
Speaker 1: we bring that we've done the modeling, all the fundamental

670
00:35:02,960 --> 00:35:05,680
Speaker 1: work that we do, and then this very active engagement

671
00:35:05,680 --> 00:35:07,560
Speaker 1: where we want to stay engaged and if there's something

672
00:35:07,600 --> 00:35:09,640
Speaker 1: that's part of where the ALTS business came from, if

673
00:35:09,640 --> 00:35:12,120
Speaker 1: there's something in the private markets that could work differently

674
00:35:12,160 --> 00:35:15,160
Speaker 1: to help a big public company move can we make connections,

675
00:35:15,160 --> 00:35:17,879
Speaker 1: can we help that move along? And then proxy voting

676
00:35:17,960 --> 00:35:20,319
Speaker 1: is important. So most of what we do is this

677
00:35:20,400 --> 00:35:24,600
Speaker 1: kind of very intense active engagement, and we're active owners

678
00:35:24,600 --> 00:35:27,960
Speaker 1: of the company, not always an activist in the traditional meaning.

679
00:35:28,400 --> 00:35:31,400
Speaker 1: UM we also launched an index product, so you know,

680
00:35:31,440 --> 00:35:33,759
Speaker 1: our view is that you really have to hold these

681
00:35:33,800 --> 00:35:37,240
Speaker 1: companies if you want to own the winners over time,

682
00:35:37,680 --> 00:35:39,880
Speaker 1: and if you want to drive change, you also have

683
00:35:39,920 --> 00:35:42,520
Speaker 1: to hold the companies. You can't divest UM And we

684
00:35:42,640 --> 00:35:45,960
Speaker 1: see a problem in the dominance of the current index

685
00:35:46,000 --> 00:35:49,479
Speaker 1: providers is that they're big and it's complicated to vote

686
00:35:49,480 --> 00:35:52,640
Speaker 1: shares because you have people on different sides of every issue.

687
00:35:52,960 --> 00:35:54,800
Speaker 1: So we while we're at it, put a new index

688
00:35:54,800 --> 00:35:57,600
Speaker 1: product out in the market that tickers vote, which is

689
00:35:57,640 --> 00:36:00,600
Speaker 1: pretty simple. It's literally an index we've with the shares

690
00:36:00,640 --> 00:36:03,440
Speaker 1: in line without economic outcomes, and we post them as

691
00:36:03,440 --> 00:36:05,800
Speaker 1: soon as we vote, So a little option for people

692
00:36:05,840 --> 00:36:07,919
Speaker 1: that still want to use index instead of actives. That's

693
00:36:07,920 --> 00:36:11,120
Speaker 1: really interesting. We've talked about x on so far and

694
00:36:11,160 --> 00:36:14,719
Speaker 1: Tesla and Ford tell us about your involvement in General Motors.

695
00:36:14,719 --> 00:36:19,200
Speaker 1: What attracted you to the company and what sort of

696
00:36:19,560 --> 00:36:22,000
Speaker 1: positioning do you have with him? Yeah, it's General Motors

697
00:36:22,040 --> 00:36:23,920
Speaker 1: and General Motors. It's going to take some time, right,

698
00:36:23,960 --> 00:36:27,000
Speaker 1: So General Motors has been in the portfolio since we launched,

699
00:36:27,360 --> 00:36:29,960
Speaker 1: since we launched net Z and still is and has

700
00:36:30,000 --> 00:36:32,399
Speaker 1: stayed there. And when we work with General Motors, it's

701
00:36:32,440 --> 00:36:35,120
Speaker 1: a lot of our work has been about how do

702
00:36:35,200 --> 00:36:38,600
Speaker 1: we accelerate the transition to battery electric vehicles for them

703
00:36:38,640 --> 00:36:42,760
Speaker 1: as a manufacturer, and not for an ideological reason, purely

704
00:36:42,800 --> 00:36:45,880
Speaker 1: because we think the consumer demand is shifting more quickly.

705
00:36:46,000 --> 00:36:49,560
Speaker 1: That's where the and so this is again this is

706
00:36:49,600 --> 00:36:52,680
Speaker 1: an economic argument for us and working with General Motors,

707
00:36:52,719 --> 00:36:56,239
Speaker 1: that the faster you get to all battery electric which

708
00:36:56,280 --> 00:36:58,560
Speaker 1: means you need to build the battery plants. You need

709
00:36:58,600 --> 00:37:00,400
Speaker 1: to build them bigger, you need to build them faster,

710
00:37:00,640 --> 00:37:04,240
Speaker 1: you need supply agreements locked up for the rare metals,

711
00:37:04,320 --> 00:37:05,959
Speaker 1: and then you need to work on bringing the cost

712
00:37:06,000 --> 00:37:09,200
Speaker 1: of batteries down because as all of that happens, GM

713
00:37:09,280 --> 00:37:11,239
Speaker 1: makes eight to nine million cars a year, and so

714
00:37:11,280 --> 00:37:14,920
Speaker 1: if those cars are all battery electric vehicles, uh, and

715
00:37:15,080 --> 00:37:18,759
Speaker 1: the battery cost comes down, you know what's testas multiple? Right,

716
00:37:18,840 --> 00:37:20,880
Speaker 1: they can have the opportunity to go from where the

717
00:37:20,920 --> 00:37:23,440
Speaker 1: GM multiple is today, which is very low, very depressed

718
00:37:23,520 --> 00:37:27,160
Speaker 1: value stock, all the way up to what producing vivs

719
00:37:27,200 --> 00:37:29,080
Speaker 1: at scale is going to look like. And that's a

720
00:37:29,160 --> 00:37:33,440
Speaker 1: huge value creation opportunity. Let's talk about what's going on

721
00:37:33,520 --> 00:37:37,440
Speaker 1: in in the world of E S G and greenwashing

722
00:37:37,440 --> 00:37:39,680
Speaker 1: and woke is um. There's so many things happening here

723
00:37:40,120 --> 00:37:45,239
Speaker 1: and I think people don't really use these buzzwords appropriately.

724
00:37:45,360 --> 00:37:48,719
Speaker 1: Let's start out with greenwashing. Tell us your view of

725
00:37:48,760 --> 00:37:52,160
Speaker 1: it and why it's problematic. Well, I think if you

726
00:37:52,200 --> 00:37:54,640
Speaker 1: can do everything from scratch. I get this a lot

727
00:37:54,760 --> 00:37:58,000
Speaker 1: from people that run large asset management companies. You're like, gosh,

728
00:37:58,120 --> 00:38:00,160
Speaker 1: I wish, I wish I could just start every thing

729
00:38:00,239 --> 00:38:03,160
Speaker 1: from scratch again in this environment. So I think the

730
00:38:03,200 --> 00:38:06,480
Speaker 1: reality is if you're running a strategy and you you

731
00:38:06,520 --> 00:38:09,600
Speaker 1: don't care or you don't have risk metrics on let's

732
00:38:09,640 --> 00:38:12,160
Speaker 1: say the environment in your strategy, it's very hard to

733
00:38:12,160 --> 00:38:13,680
Speaker 1: fit them on top. And I think a lot of

734
00:38:13,719 --> 00:38:16,960
Speaker 1: people get caught in that from a greenwashing perspective. So

735
00:38:17,440 --> 00:38:20,200
Speaker 1: if what we what we do is we start from scratch,

736
00:38:20,280 --> 00:38:24,440
Speaker 1: we think about these material impact things as financial data,

737
00:38:24,640 --> 00:38:27,439
Speaker 1: and it's just part of our process and so there's

738
00:38:27,440 --> 00:38:31,200
Speaker 1: no greenwashing there. But for people that we're investing in

739
00:38:31,280 --> 00:38:34,840
Speaker 1: something and now want to take advantage of a moment

740
00:38:34,840 --> 00:38:37,799
Speaker 1: in time, or people that are investing and actually don't

741
00:38:37,840 --> 00:38:41,400
Speaker 1: really understand how environmental risks fatter into the portfolio, I

742
00:38:41,440 --> 00:38:43,160
Speaker 1: do think you just have to take a time out

743
00:38:43,360 --> 00:38:46,239
Speaker 1: and and go back to basics and better articulate what

744
00:38:46,280 --> 00:38:48,680
Speaker 1: the strategy is and what you're actually doing to the market.

745
00:38:48,680 --> 00:38:50,640
Speaker 1: And if it's not a green strategy, you kind of

746
00:38:50,640 --> 00:38:52,640
Speaker 1: have to say that. It seems like a lot of

747
00:38:52,640 --> 00:38:56,600
Speaker 1: this is just spin on the hot buzzword of the day. Well,

748
00:38:56,640 --> 00:38:58,640
Speaker 1: a lot of our society right now is spin on

749
00:38:58,680 --> 00:39:00,359
Speaker 1: the buzzword of the day. So I think we need

750
00:39:00,400 --> 00:39:02,800
Speaker 1: to be very careful about that when it comes to investing.

751
00:39:03,040 --> 00:39:07,440
Speaker 1: So let's talk about woke ism. You're describing E s

752
00:39:07,480 --> 00:39:10,080
Speaker 1: G As sort of a risk management tool to filter

753
00:39:10,160 --> 00:39:14,480
Speaker 1: out certain potential problems down the road. But if I

754
00:39:14,520 --> 00:39:16,520
Speaker 1: pick up the Wall Street Journal or the New York

755
00:39:16,520 --> 00:39:19,439
Speaker 1: Post and flipped to the editorial section, all I hear

756
00:39:19,600 --> 00:39:22,879
Speaker 1: is woke capitalism. And this is what Disney is doing,

757
00:39:22,920 --> 00:39:24,600
Speaker 1: and this is what Apple is doing, and this is

758
00:39:24,600 --> 00:39:28,080
Speaker 1: what Nike is doing. Is this really woke capitalism? Tell

759
00:39:28,160 --> 00:39:30,759
Speaker 1: us what's happening in that space? Yeah, I think we

760
00:39:30,800 --> 00:39:33,640
Speaker 1: have to remember what capitalism is. And and then I'm

761
00:39:33,680 --> 00:39:35,520
Speaker 1: not sure what we mean by woke, which is part

762
00:39:35,560 --> 00:39:39,160
Speaker 1: of the problem. So capitalism is meant to be you

763
00:39:39,560 --> 00:39:42,719
Speaker 1: in public markets, can you know put that in the

764
00:39:42,719 --> 00:39:45,560
Speaker 1: private markets as well. It's meant to be you have

765
00:39:45,640 --> 00:39:49,680
Speaker 1: a set of financial shareholders, you have other stakeholders. You're

766
00:39:49,719 --> 00:39:52,680
Speaker 1: making money for the shareholders over time. That's that's the

767
00:39:52,719 --> 00:39:56,560
Speaker 1: definition of capitalism. Um, it's really hard to make money

768
00:39:56,560 --> 00:40:00,080
Speaker 1: for shareholders, the financial shareholders over time. If you've and

769
00:40:00,160 --> 00:40:03,719
Speaker 1: treat your workers well, or you destroy the community in

770
00:40:03,719 --> 00:40:06,160
Speaker 1: which you live, that's just kind of good business or

771
00:40:06,239 --> 00:40:08,839
Speaker 1: doing business the right way. I think we sometimes get

772
00:40:08,840 --> 00:40:13,640
Speaker 1: confused when we talk about values um or practices and

773
00:40:13,680 --> 00:40:17,240
Speaker 1: you can't link it directly back to financial returns. So listen.

774
00:40:17,320 --> 00:40:19,480
Speaker 1: When it comes to climate, we feel like we can

775
00:40:19,520 --> 00:40:21,040
Speaker 1: do a pretty good job with the data is out

776
00:40:21,040 --> 00:40:24,960
Speaker 1: there to link how a company handles climate and environment

777
00:40:25,440 --> 00:40:28,000
Speaker 1: with how they perform as a stock over time. You know,

778
00:40:28,000 --> 00:40:30,440
Speaker 1: there's not enough data on the social side. The research

779
00:40:30,520 --> 00:40:33,200
Speaker 1: is spotty. I really hope there's better data. I hope

780
00:40:33,239 --> 00:40:35,440
Speaker 1: the research gets better. I hope we have causality there.

781
00:40:35,560 --> 00:40:37,520
Speaker 1: But I think as investors we have to be careful

782
00:40:37,560 --> 00:40:41,719
Speaker 1: where we're talking about um. If the company has less emissions,

783
00:40:42,160 --> 00:40:44,319
Speaker 1: they get credit for trying to do the right thing

784
00:40:44,480 --> 00:40:48,040
Speaker 1: and the stock price goes up. That's capitalism UM. Where

785
00:40:48,160 --> 00:40:50,600
Speaker 1: from a values based perspective, we want to ask a

786
00:40:50,600 --> 00:40:53,040
Speaker 1: company to do something that's a little bit different. So

787
00:40:53,239 --> 00:40:56,720
Speaker 1: I think that distinction is really important. And there's pretty

788
00:40:56,800 --> 00:41:00,480
Speaker 1: robust in on governance. If if you if you elevate

789
00:41:00,480 --> 00:41:03,879
Speaker 1: women to senior members, if you have people on your

790
00:41:03,880 --> 00:41:08,440
Speaker 1: board that are diverse, those companies historically have outperformed the

791
00:41:08,480 --> 00:41:11,040
Speaker 1: companies that have not. Yeah, and and let's talk the

792
00:41:11,040 --> 00:41:12,879
Speaker 1: board for a minute is another one that it's very

793
00:41:12,920 --> 00:41:15,520
Speaker 1: hard to reduce into one stat So if you think

794
00:41:15,560 --> 00:41:17,320
Speaker 1: about all the research that's been done on boards and

795
00:41:17,320 --> 00:41:18,680
Speaker 1: an end to number one. We do a lot of

796
00:41:18,719 --> 00:41:21,400
Speaker 1: work with academics, so we're always trying to look for

797
00:41:21,440 --> 00:41:23,680
Speaker 1: these places where we've got data and causality and we

798
00:41:23,680 --> 00:41:26,239
Speaker 1: can link it to economic outcomes, um and when it

799
00:41:26,239 --> 00:41:28,000
Speaker 1: comes to boards, but a lot of the research would

800
00:41:28,000 --> 00:41:31,000
Speaker 1: tell us is if a board is deeply non diverse.

801
00:41:31,640 --> 00:41:34,040
Speaker 1: The first, if you had one diverse person or thinker,

802
00:41:34,760 --> 00:41:37,360
Speaker 1: they may actually have worse performance. But if a board

803
00:41:37,480 --> 00:41:41,280
Speaker 1: starts to have multiple varieties of diversity and the board

804
00:41:41,400 --> 00:41:44,520
Speaker 1: listens to the diverse points of view, those are the

805
00:41:44,560 --> 00:41:46,920
Speaker 1: boards where we get the real outperformance. And then remember

806
00:41:47,000 --> 00:41:49,359
Speaker 1: it's a board, so it's not just diversity of thought.

807
00:41:49,400 --> 00:41:52,560
Speaker 1: It has to be diversity of capability because as these

808
00:41:52,560 --> 00:41:55,640
Speaker 1: companies go through change, you know, you need other CEOs

809
00:41:55,680 --> 00:41:58,320
Speaker 1: that have been successful through change. You need you know,

810
00:41:58,360 --> 00:42:00,839
Speaker 1: if you're being an old school media company, you need

811
00:42:00,880 --> 00:42:03,160
Speaker 1: people on the board that are successful for with where

812
00:42:03,160 --> 00:42:04,799
Speaker 1: the puck is going. So I think we have to

813
00:42:05,160 --> 00:42:07,760
Speaker 1: look for both of those kinds of diversity and boards

814
00:42:07,800 --> 00:42:10,200
Speaker 1: that listen to each other, have diversity and have that

815
00:42:10,239 --> 00:42:13,440
Speaker 1: important diversity of capability. Absolutely, those are going to be

816
00:42:13,480 --> 00:42:16,400
Speaker 1: the highest performing ones. So we talked about X and

817
00:42:16,480 --> 00:42:19,879
Speaker 1: we talked about GM and Ford and Tesla. What other

818
00:42:19,960 --> 00:42:24,080
Speaker 1: companies are you looking at as being on the cutting

819
00:42:24,200 --> 00:42:28,920
Speaker 1: edge of change to take advantage of this transitional moment. Yeah,

820
00:42:28,920 --> 00:42:30,560
Speaker 1: I mean one of the things we're excited about. I

821
00:42:30,600 --> 00:42:32,719
Speaker 1: can't talk about the product because we're not through the

822
00:42:32,840 --> 00:42:35,800
Speaker 1: sec with it yet although it's in filing. But from

823
00:42:35,840 --> 00:42:39,200
Speaker 1: a theme perspective, we're super excited for for the U S.

824
00:42:39,239 --> 00:42:42,840
Speaker 1: From a US competitiveness perspective, what happened during COVID is

825
00:42:42,880 --> 00:42:46,520
Speaker 1: supply chains were two global, too fragile and they broke.

826
00:42:46,719 --> 00:42:48,800
Speaker 1: And so what we're already seeing and we're going to

827
00:42:48,840 --> 00:42:50,760
Speaker 1: see a lot more of this in the next few years,

828
00:42:51,040 --> 00:42:54,680
Speaker 1: is we're seeing a huge resurgence of manufacturing jobs in

829
00:42:54,719 --> 00:42:56,400
Speaker 1: the US and it's going to be great for a

830
00:42:56,480 --> 00:42:59,879
Speaker 1: lot of these communities. So we see UM semiconductor plan,

831
00:43:00,160 --> 00:43:07,160
Speaker 1: so we see battery plants Michigan, Tennessee, Kentucky, Arizona, Texas exactly.

832
00:43:07,239 --> 00:43:10,799
Speaker 1: So it's happening already there's a huge increase in manufacturing.

833
00:43:11,120 --> 00:43:13,840
Speaker 1: And then as that happens, if you build a manufacturing plant,

834
00:43:13,920 --> 00:43:16,360
Speaker 1: there's a huge job multiplier. You have people come in

835
00:43:16,400 --> 00:43:18,240
Speaker 1: to build a plant, the people work in the plant,

836
00:43:18,440 --> 00:43:20,080
Speaker 1: and people work to move goods in and out of

837
00:43:20,120 --> 00:43:22,120
Speaker 1: a plant. UM, and we're going to see a huge,

838
00:43:22,440 --> 00:43:25,799
Speaker 1: huge growth. We believe in railroads. So if you're going

839
00:43:25,840 --> 00:43:28,280
Speaker 1: to increase manufacturing in the U in the North America,

840
00:43:28,360 --> 00:43:30,880
Speaker 1: guess what. You don't need to ship things overseas. You

841
00:43:30,880 --> 00:43:35,040
Speaker 1: need better and more effective UM Railroad continued to strengthen

842
00:43:35,520 --> 00:43:38,040
Speaker 1: the lines and the movement of goods around the US.

843
00:43:38,760 --> 00:43:42,120
Speaker 1: UM and then automation. So good and bad is we have?

844
00:43:42,320 --> 00:43:44,600
Speaker 1: You know, we have less, we have less birth rate

845
00:43:44,640 --> 00:43:46,680
Speaker 1: and less people coming to the U s and we're

846
00:43:46,680 --> 00:43:48,799
Speaker 1: going to have a huge number of quality jobs. And

847
00:43:48,840 --> 00:43:53,320
Speaker 1: so companies like Rockwell Automation that high quality jobs and

848
00:43:53,400 --> 00:43:57,399
Speaker 1: brand new factories with automation to assist in the manufacturing.

849
00:43:57,400 --> 00:44:00,000
Speaker 1: It's going to be pretty awesome from an investment theme perspective.

850
00:44:00,040 --> 00:44:03,920
Speaker 1: So Rockwell just isn't terrifying us with YouTube videos of

851
00:44:04,680 --> 00:44:07,759
Speaker 1: robots that are coming to kill long Now that the

852
00:44:07,760 --> 00:44:10,920
Speaker 1: the high quality worker, the high quality, blue collar if

853
00:44:10,920 --> 00:44:13,000
Speaker 1: you will, workers and all these new plants, they're not

854
00:44:13,040 --> 00:44:14,600
Speaker 1: going to be enough of them, and they're gonna be

855
00:44:14,640 --> 00:44:17,520
Speaker 1: happy the robots are there to help them. Really quite interesting.

856
00:44:18,440 --> 00:44:20,880
Speaker 1: So let's talk a little bit about some of the

857
00:44:21,080 --> 00:44:25,760
Speaker 1: political pushback to the sort of investing you do. Maybe

858
00:44:25,760 --> 00:44:30,000
Speaker 1: Florida is the best example, passing laws to punish a

859
00:44:30,040 --> 00:44:36,719
Speaker 1: specific company, Disney, who objected to Florida's anti lgbt que

860
00:44:37,320 --> 00:44:44,399
Speaker 1: sort of UM legislation. Is the environment changing for this

861
00:44:44,520 --> 00:44:48,319
Speaker 1: sort of um proxy voning and criticism and working with

862
00:44:48,400 --> 00:44:52,160
Speaker 1: companies or is Florida just Florida and you know it's

863
00:44:52,200 --> 00:44:56,840
Speaker 1: kind of a one off um Listen. I think companies,

864
00:44:57,040 --> 00:45:00,160
Speaker 1: companies have consumers, and so if I'm a company, if

865
00:45:00,160 --> 00:45:02,920
Speaker 1: I'm Disney, and I have consumers, and I feel like

866
00:45:03,080 --> 00:45:06,280
Speaker 1: my company needs to stand for something because it allows

867
00:45:06,280 --> 00:45:08,600
Speaker 1: me to serve my consumers and my consumers to say

868
00:45:08,640 --> 00:45:11,040
Speaker 1: my brand has value. That's something that Disney is going

869
00:45:11,080 --> 00:45:13,840
Speaker 1: to have to push for. So I think, first of all,

870
00:45:14,000 --> 00:45:16,680
Speaker 1: and when it comes to public companies, some of them

871
00:45:16,719 --> 00:45:19,040
Speaker 1: have one audience, some of them have another audience, and

872
00:45:19,040 --> 00:45:21,359
Speaker 1: they may need to behave in ways to make their

873
00:45:21,400 --> 00:45:23,239
Speaker 1: audience feel good so they can be in business and

874
00:45:23,280 --> 00:45:25,600
Speaker 1: sell their product. Um. I think separately, if we talk

875
00:45:25,680 --> 00:45:29,840
Speaker 1: about proxy voting, successful proxy votes should be economic. So

876
00:45:29,920 --> 00:45:32,200
Speaker 1: back to the kind of fiduciary concept we were talking

877
00:45:32,239 --> 00:45:35,319
Speaker 1: about earlier. So if a proxy vote says, you know,

878
00:45:35,719 --> 00:45:38,480
Speaker 1: can you please disclose more information about your workforce? That's

879
00:45:38,520 --> 00:45:41,319
Speaker 1: helpful to investors. Great. That often makes sense to us.

880
00:45:41,680 --> 00:45:44,120
Speaker 1: If the proxy vote says I don't like this thing

881
00:45:44,160 --> 00:45:47,040
Speaker 1: you do, please don't do it, but there's no economic causality,

882
00:45:47,520 --> 00:45:49,520
Speaker 1: I think it's hard for that to be a proxy

883
00:45:49,680 --> 00:45:53,240
Speaker 1: voting issue versus a values based conversation with the company.

884
00:45:53,480 --> 00:45:56,120
Speaker 1: So our belief is proxy votes matter. We should all

885
00:45:56,200 --> 00:45:58,680
Speaker 1: use our vote, but proxy voting is a tool to

886
00:45:58,760 --> 00:46:02,880
Speaker 1: drive kind of long term economic performance with companies. Sometimes

887
00:46:02,880 --> 00:46:05,719
Speaker 1: there are just value based issues that that shouldn't be

888
00:46:05,719 --> 00:46:09,120
Speaker 1: tackled through proxy votes. I know I only have you

889
00:46:09,160 --> 00:46:11,200
Speaker 1: for a limited amount of time, So let's jump to

890
00:46:11,239 --> 00:46:14,280
Speaker 1: our favorite questions that we ask all of our guests,

891
00:46:14,600 --> 00:46:18,360
Speaker 1: starting with tell us about your early mentors who helped

892
00:46:18,480 --> 00:46:22,080
Speaker 1: to shape your career. Yeah, it's funny, I don't have

893
00:46:22,120 --> 00:46:24,920
Speaker 1: a lot of mentors. Where it was that one guiding

894
00:46:25,040 --> 00:46:26,879
Speaker 1: light I found that I picked up a little bits

895
00:46:26,880 --> 00:46:30,640
Speaker 1: and pieces from different people. So Um, Condi. Rice was

896
00:46:30,640 --> 00:46:33,200
Speaker 1: a provost when I was at Stanford, and so it

897
00:46:33,320 --> 00:46:35,359
Speaker 1: was that inspiration that sort of sent me off down

898
00:46:35,360 --> 00:46:38,080
Speaker 1: the international relations path. There was just a level of

899
00:46:39,120 --> 00:46:42,279
Speaker 1: smarts and confidence that I really appreciated that I picked

900
00:46:42,360 --> 00:46:46,360
Speaker 1: up from her. Um and then a professor in business

901
00:46:46,360 --> 00:46:49,640
Speaker 1: school who said, women can definitely have it all, but

902
00:46:49,760 --> 00:46:51,440
Speaker 1: you're kidding yourself if you think you can have it

903
00:46:51,480 --> 00:46:53,759
Speaker 1: all at the same time. So like pace yourself, like

904
00:46:53,840 --> 00:46:56,320
Speaker 1: go go after it, but pace yourself. You can't literally

905
00:46:56,320 --> 00:46:58,720
Speaker 1: do it all at the same time, which is good advice.

906
00:46:58,760 --> 00:46:59,919
Speaker 1: And then I think there are a lot of people

907
00:47:00,080 --> 00:47:01,920
Speaker 1: for me where I learned one or two lessons from

908
00:47:01,960 --> 00:47:04,320
Speaker 1: different people, and now I do a lot of mentoring

909
00:47:04,320 --> 00:47:07,719
Speaker 1: of other people. And that that is my overarching suggestion

910
00:47:07,920 --> 00:47:10,320
Speaker 1: on this is you gotta ask a lot of questions

911
00:47:10,360 --> 00:47:12,480
Speaker 1: and you don't always have to have a lifetime relationship

912
00:47:12,520 --> 00:47:15,080
Speaker 1: with everyone. But get any any nugget you can get

913
00:47:15,280 --> 00:47:18,120
Speaker 1: and run with it. I like it. Let's talk about books.

914
00:47:18,239 --> 00:47:20,000
Speaker 1: What are some of your favorites and what are you

915
00:47:20,040 --> 00:47:23,560
Speaker 1: reading currently? So Um and my angel, who is actually

916
00:47:23,560 --> 00:47:25,719
Speaker 1: a favorite of mine, I find it relaxing and and

917
00:47:25,800 --> 00:47:27,640
Speaker 1: out of my you know, it's so different than what

918
00:47:27,719 --> 00:47:31,120
Speaker 1: I do every day, and kind of American and lyrical. Um,

919
00:47:31,120 --> 00:47:33,319
Speaker 1: Harry Potter, we have a younger one of our kids

920
00:47:33,360 --> 00:47:36,759
Speaker 1: is younger. So working our way through Harry Potter and

921
00:47:36,800 --> 00:47:40,120
Speaker 1: then um the Daniel Kahneman thinking fast and acting slow.

922
00:47:40,760 --> 00:47:42,560
Speaker 1: I read that last year. I like that a lot

923
00:47:42,600 --> 00:47:45,439
Speaker 1: because it's you got to remember sometimes how our brains work,

924
00:47:45,800 --> 00:47:47,360
Speaker 1: and the fact that we rushed to things and we

925
00:47:47,440 --> 00:47:49,799
Speaker 1: shortcut and we group things, and so I find that

926
00:47:49,880 --> 00:47:52,919
Speaker 1: helpful sometimes and just being calm about how else could

927
00:47:52,920 --> 00:47:55,120
Speaker 1: we solve a problem or why is somebody reacting the

928
00:47:55,120 --> 00:47:58,560
Speaker 1: way that they do. What sort of advice would you

929
00:47:58,600 --> 00:48:01,759
Speaker 1: give to a recent college graduate who is interested in

930
00:48:01,760 --> 00:48:06,120
Speaker 1: a career in either impact E S G activists, what

931
00:48:06,200 --> 00:48:09,719
Speaker 1: if we want to call it type investing or E

932
00:48:09,880 --> 00:48:12,759
Speaker 1: T F and passive investment. Well, first I'd say those

933
00:48:12,760 --> 00:48:15,239
Speaker 1: are great areas to go into. You should go into it,

934
00:48:15,320 --> 00:48:18,160
Speaker 1: and definitely, UM, learn how to invest, learn how to

935
00:48:18,200 --> 00:48:21,720
Speaker 1: be investor. Don't stick to one fat or one mouse trap.

936
00:48:21,760 --> 00:48:24,480
Speaker 1: If you can learn how to be an investor or

937
00:48:24,480 --> 00:48:28,160
Speaker 1: how investors think, UM, that will serve you so well

938
00:48:28,239 --> 00:48:31,279
Speaker 1: in our business um, and I guess too. New to

939
00:48:31,400 --> 00:48:33,440
Speaker 1: new graduates, I would say, don't don't give up hope.

940
00:48:33,480 --> 00:48:37,319
Speaker 1: It's gonna be a bad job market. So take those internships,

941
00:48:37,400 --> 00:48:39,680
Speaker 1: be a little bit scrappy, and just learn from whatever

942
00:48:39,719 --> 00:48:42,640
Speaker 1: that first job is two years in, because you'll pick

943
00:48:42,680 --> 00:48:44,759
Speaker 1: up a phenomenal amount of information and if it's not

944
00:48:44,800 --> 00:48:47,319
Speaker 1: what you love, great, then go do something else after it.

945
00:48:47,360 --> 00:48:48,960
Speaker 1: But it's it's a great it's a great place to

946
00:48:48,960 --> 00:48:52,880
Speaker 1: build a career. Really interesting. And our final question, what

947
00:48:52,960 --> 00:48:55,480
Speaker 1: do you know about the world of investing today that

948
00:48:55,560 --> 00:48:59,319
Speaker 1: you wish you knew thirty or so years ago. I

949
00:48:59,360 --> 00:49:04,239
Speaker 1: think it's that the overall portfolio construction matters, right, So

950
00:49:04,920 --> 00:49:07,080
Speaker 1: so as an investor, thinking about when you build, like

951
00:49:07,120 --> 00:49:09,080
Speaker 1: when we build an ento number one, we build products

952
00:49:09,080 --> 00:49:11,799
Speaker 1: where we put strategies out into the market. Um, the

953
00:49:11,880 --> 00:49:14,719
Speaker 1: more you can make them balanced and with some duration.

954
00:49:14,960 --> 00:49:17,919
Speaker 1: So if somebody puts something in the portfolio, they sort

955
00:49:17,920 --> 00:49:19,840
Speaker 1: of understand what it's going to do and what the

956
00:49:19,880 --> 00:49:22,239
Speaker 1: return stream looks like and what the risk looks like.

957
00:49:22,680 --> 00:49:27,160
Speaker 1: As we're investing and then selling to other people. I

958
00:49:27,200 --> 00:49:30,360
Speaker 1: think that ability to build products that are durable and

959
00:49:30,400 --> 00:49:33,080
Speaker 1: it's clear what they do is really really important. It

960
00:49:33,160 --> 00:49:37,000
Speaker 1: lets you build your brand, it lets you build trust investors,

961
00:49:37,360 --> 00:49:41,040
Speaker 1: really really interesting. Thank you Jennifer for being so generous

962
00:49:41,080 --> 00:49:44,640
Speaker 1: with your time. We have been speaking with Jennifer Grancio.

963
00:49:44,840 --> 00:49:48,680
Speaker 1: Sheet is the CEO of Engine Number one. If you

964
00:49:48,800 --> 00:49:51,719
Speaker 1: enjoy this conversation, well check out any of our previous

965
00:49:52,120 --> 00:49:57,320
Speaker 1: four hundred and fifty interviews. You can find those at iTunes, Spotify, YouTube,

966
00:49:57,560 --> 00:50:01,239
Speaker 1: wherever you get your favorite podcasts. Sign up from my

967
00:50:01,360 --> 00:50:04,319
Speaker 1: daily reads at ridults dot com. You can follow me

968
00:50:04,360 --> 00:50:08,000
Speaker 1: on Twitter at Ridholtz. Check out all of the Bloomberg

969
00:50:08,040 --> 00:50:11,960
Speaker 1: podcasts at podcast I would be remiss if I did

970
00:50:11,960 --> 00:50:15,120
Speaker 1: not thank our correct team who helps put these conversations

971
00:50:15,120 --> 00:50:19,760
Speaker 1: together each week. Sarah Livesey is my audio engineer. Atika

972
00:50:19,840 --> 00:50:23,319
Speaker 1: Valbran is my project manager. Sean Russo is my head

973
00:50:23,360 --> 00:50:27,520
Speaker 1: of research. Paris Wold is my producer. I'm Barry Riholts.

974
00:50:28,000 --> 00:50:31,680
Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.